Important changes are in store for Corporations Act (Ontario) which will affect all not-for-profit corporations currently in existence in Ontario.
As part of government’s initiative to improve and modernize not-for-profit law, a new Not-For Profit Corporations Act was introduced back in 2010 and received Royal Ascent on October 25, 2010. As a result, the new Not-For-Profit Corporations Act is set to come into full force on January 1, 2013, replacing the current Corporations Act (Ontario).
The new Not-For-Profit Corporations Act is expected to simplify the incorporation process by reducing the time it takes to incorporate and by allowing for electronic submission of Articles of Incorporation. It will also improve corporate governance and accountability for not-for-profit corporations by introducing statutory duty of care for directors which will hold them accountable for their actions to a higher standard and will push them to act in good faith and the best interest of the organization.
The new Not-For-Profit Corporations Act will also provide benefits to members by offering more remedies in cases where it is reasonably believed that a director has not or is not acting in the best interests of the organization, by providing greater access to financial records, and granting members right to be heard in cases where a disciplinary action is considered against them.
On the business side, the new Not-For-Profit Corporations Act will specifically stipulate that not-for-profit corporations are allowed to participate in commercial activities and reinvest their profits in support of not-for-profit processes or deeds.
A new process of financial review will be introduced for specific circumstances in lieu of the normally complicated audit process.
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